Today’s government deficits allow the older generation to live at the expense of the young and those not yet born. So said eminent British historian and Harvard professor Niall Ferguson in a recent lecture. It is indeed remarkable that the young accept the fact that they will eventually end up having to pay off a mountain of debt at the same time that their own standard of living is eroding. But what is even more surprising, as Ferguson went on to add, is how easy it is “to win the support of young voters for policies that would ultimately make matters even worse for them, like maintaining defined-benefit pensions for public employees. If young Americans knew what was good for them, they would all be in the Tea Party.”

Instead, polls show that young Americans have become increasingly liberal at the very time that their financial prospects are deteriorating. Today’s voters under the age of 30 favor Democrats over Republicans by more than 14 percentage points, while voters under 30 were evenly divided between the two parties in the 1980s (and have remained more conservative as they have aged).

Ferguson is known for being provocative, and there was a bit of mischief in his assertion. The Tea Party isn’t the most neutral choice as a symbol of fiscal responsibility. In addition, some critics argue that the Tea Party is willing to preserve programs that serve the old, such as Social Security, and slash spending elsewhere, particularly on programs that benefit the young. So let’s rephrase the question to make it less loaded: If young Americans knew what was good for them, would they all support aggressive deficit-cutting plans that slash government spending across the board?

One way of analyzing such questions that has become increasingly popular among policy makers is what is known as intergenerational equity. The basic idea is straightforward: Public policy decisions should not enrich one generation at the expense of another. Ideally, in fact, each generation should leave the world a little better for the next one. This standard is relevant to a lot more than just the budget debate – it also applies to global warming, health care, and even zoning. People shouldn’t be allowed to trash the environment to maximize short-term profits or put up cheesy buildings that disfigure a historic neighborhood just to make a fast buck. There is a responsibility not to degrade the world that the next generation will inherit.

But intergenerational equity doesn’t always lead to the conclusions you might expect. It isn’t so much about good intentions as it is about weighing benefits against costs. For example, policies to prevent global warming may always sound progressive, but those that are badly crafted could slow economic growth and ultimately result in a lower standard of living for future generations. It might be smarter to spend on, say, converting power plants from coal to cleaner natural gas rather than using the same money to put up wind turbines. The key test is which policies figure to leave the next generation better off in objective terms several decades from now.

When it comes to government finances, the facts are as well known as they are stark. The federal government spends more than seven times as much on someone 65 or older as it does on a child. Even after you include state and local spending on public schools, total spending per person on children is less than half that for the elderly. Over the past decade, the number of children in poverty has soared, and over the rest of this decade, spending on children will shrink by a fifth (as a percentage of total federal spending), while spending on the elderly will swell even more. On the current path, in 25 years Social Security, health-care and interest on accumulated debt would consume all Federal government revenue, according to the latest Congressional Budget Office projections. As a percentage of GDP, all other Federal spending would fall by at least 15%.

There are counter-arguments for some of these statistics. The young will be old some day, and it may be in their interest to spend whatever is necessary for the aged – assuming that the same money will be available when today’s young people reach their 60s. Some of the deficit could be eliminated by ending the Bush tax cuts, projected to cost more than $3.5 trillion over the next 10 years. But it is important to note that 78% of the tax cut has gone to the middle class. And so far, neither party has wanted to raise taxes on people earning less than $200,000 a year.

So Niall Ferguson’s challenge remains: Why aren’t today’s young people all fiscal hawks? One explanation is that social and financial attitudes are inseparably mixed together in people’s political beliefs, and financial interests alone aren’t enough to change their loyalties. Or perhaps young people are simply idealistic. Either way, Americans over the age of 55 who are able to retire under old-fashioned defined-benefit pension plans and who can look forward to keeping their full Social Security benefits should heartily salute the younger generation for their extraordinary generosity.